SB 12

______ combines a purchases budget and a cost of goods sold budget.

inventory budget

Managerial accounting is

used by managers for planning, directing, and controlling a business.

The difference between an actual and budgeted revenue or cost is called the

variance

A statement of the sources and uses of cash in a business for a specific period of time is known as the Blank______.

cash flow statement

Which of the following formulas is used in a purchases budget to produce most of the schedules of a master budget?

Amount to be bought = Amount to be used + Desired ending amount - Beginning amount

If a firm owner's equity in the firm is $100,000 and he or she has liabilities that amount to $22,000, then according the accounting equation, his or her assets would be worth

$122,000

Which of the following are assumptions that underlie basic accounting concepts? (Check all that apply.)

A business is separate from its owners. An operating business will continue to remain in business.

Identify the schedules that must be completed to create a master budget. (Check all that apply.)

A cash budget A cash receipts budget

______ costs are those costs that change with each unit produced.

Variable

Money that is owned to a business by customers is tracked by the firm's

Accounts receivable

Which of the following is implied by the going concern concept?

As a separate unit, a business may continue even if it is bought by another owner.

Which of the following is one of the common financial statements? (Check all that apply.)

Balance sheet Statement of owners' equity Statement of retained earnings Income statement Cash flow statement

Aspects of the world outside a business that could change the business's costs are called

Blank 1: external or external (cost) Blank 2: factors

Aspects within a business that could change the business's costs are called

Blank 1: internal or internal (cost) Blank 2: factors

An asset that is acquired for the purpose of either generating future incomes and cash flows or appreciating in value to provide an increase in future wealth is called a(n)

Blank 1: investment

A method for business forecasting and control in which specific expected volumes and prices per unit are used is called . (Enter one word in each blank.)

Blank 1: standard or profit Blank 2: budgeting or planning

Which of the following methodologies help reduce the trouble of selecting from among investment options? (Check all that apply.)

Differential revenues and expenses Net present value analysis

Which of the following tasks should an accounting system easily and efficiently accomplish? (Check all that apply.)

Enabling an exhaustive context-sensitive help function Aiding in the development of a cash budget

______ is/are standardized rules for accounting procedures set out by the Financial Accounting Standards Board, and used in all audits, and submissions of accounting reports to the government.

Generally accepted accounting principles

Which of the following statements about the income statement are correct? (Check all that apply.)

It is the primary source of information about a business' profitability. Revenues - Expenses = Net Income. The single-step and multiple step are two formats commonly used for creating an income statement.

Which of the following statements about the business entity concept are correct? (Check all that apply.)

It makes it possible to separate business and personal transactions. It underlies the legal forms of establishing businesses such as corporations, limited partnerships, and limited liability companies. It is implicit in all business regulation.

Which of the following is one of the five primary criteria for a small business' recording-keeping system? (Check all that apply.)

It should be simple to use. Its reports must be timely. It must be understandable to the manager. It must assure that the details are accurate. Its data must be secure.

______ accounting is used by managers for planning, directing, and controlling a business.

Managerial

Which of the following statements regarding accounts receivable are correct? (Check all that apply.)

Many businesses treat receivables that are more than 90 days old as delinquent. The key to controlling receivables is to sort them by age, so older receivables stand out. Accounts receivable is money that customers owe a company.

In the context of the labor budget, which of the following steps are included in predicting labor costs when they vary with the output amount? (Check all that apply.)

Multiplying the labor cost per unit with the number of units produced Estimating the amount of labor required to produce each unit

Which of the following statements about cash flow statements are correct? (Check all that apply.)

Operating, investing, and financing activities are the three most common activities the cash flow statement reports. Business owners should create cash flow statements that are developed from the business' cash records. It reports cash inflows called receipts and outflows known as payments for a specific period of time.

______ is an increase in owners' equity caused by selling a product or service.

Revenue

Which of the following statements about the balance sheet are correct? (Check all that apply.)

This statement is called a balance sheet because of accounting equation must balance. It contains a business' assets, liabilities, and equity. It is a statement of what a business owns, owes, and the value that the owners have invested in it.

True or false: The common financial statements provide business owners with information to help make informed decisions regarding a firm's operations and overall financial health.

True

True or false: Small online businesses that have very little cost of labor are mandated to show labor as a separate amount.

True or false: Small online businesses that have very little cost of labor are mandated to show labor as a separate amount.

The Blank______ demonstrates that the claims of creditors and owners in total cannot be greater than the asset value of a business.

accounting equation

The basic accounting concept that assets equal liabilities plus owners' equity is known as the Blank______.

accounting equation

In the context of accounting functions, _____ records to track what a business owes and to make timely payments in order to capture prompt pay discounts and help maintain a good credit rating for a business.

accounts payable

Revenue is

an increase in owners' equity caused by selling a product or service.

Generally accepted accounting principles

are standardized rules for accounting procedures set out by the FASB and used in all audits, and submissions of accounting reports to the government.

An easy and effective accounting system helps a firm maintain an internal "Blank______" that records all entries and modifications to the accounting system to allow errors to be identified and corrected.

audit trail

A(n) Blank______ describes what a business owns, what it owes to others, and how much value the owners have invested in it.

balance sheet

An accounting statement of what a business owns, what it owes to others, and how much value the owners have invested in it is known as a(n)

balance sheet

A financial plan for the future based on a single level of operations is called a

budget

The Blank______ concept is a concept that a business has an existence separate from that of its owners.

business entity

Regular and systematic reduction in income that transfers asset value to expense over time is called

depreciation

______ is an accounting concept that a business is expected to continue in existence for the foreseeable future.

going concern concept

The Blank______ is a statement that lists revenues and expenses and shows the amount of profit a business makes for a specified period of time.

income statement

The final schedules completed to create a master budget are used to prepare a(n)

pro forma projected balance sheet

The process of creating a set of interconnected budgets that combine into a master budget that can be used for assessing and controlling the business processes is called Blank______.

profit planning

The purpose of an inventory budget is to

simplify the budget process

Variable costs are expenses

that change with each unit produced.

______ depicts the number of units that are expected to be acquired during a budget period.

purchases budget

Identify the true statements about the Modified Accelerated Cost Recovery System (MACRS). (Check all that apply.)

It allows taxpayers to depreciate more of a cost earlier in the life of a capital expense. It is set by the Internal Revenue Service.

Which of the following statements about budgeting are correct? (Check all that apply.)

The first step of budgeting is making a forecast of future sales. It becomes a standard against which a business' performance can be measured. The budget becomes the basis for controlling activities and the use of resources. It is a quantitative expression of the use of resources necessary to achieve a business' strategic goals.